Healthcare reform, objectively

We heard this week from a friend of the Op-Ed page, Carolyn Keenan Kmiec, the wife of Douglas Kmiec. Both are on leave from Pepperdine University while Doug is serving as U.S. ambassador to the Republic of Malta. As strong supporters of President Obama’s efforts to have healthcare understood as a basic human right, they are constantly being asked why the U.S. lacks the universal coverage that exists even in a far less affluent nation like Malta. This is an especially awkward question, noted Carol, “when one considers that Maltese doctors view house calls -- in this age of obesity and poor nutritional habits -- as vital to the doctor-patient relationship.”

The Kmiecs sat down at the dinner table with their adult children to ascertain exactly what they all understood about the current debate. It rather quickly became apparent that they had more questions than “genuinely objective” answers, and they doubted they were alone.

We submitted the Kmiec family questions, which the ambassador stressed reflect only his personal views, to Jon Healey, The Times’ editorial board specialist on healthcare reform, in an attempt to arrive at those “genuinely objective” answers. Healey culled the answers mainly from the text of the Senate-passed bill, HR 3590, and the proposed reconciliation bill, HR 4872. He also relied on the summaries provided by the House Rules Committee on Thursday and Obama last month, as well as an analysis by the Kaiser Family Foundation

The Kmiecs’ 20 questions and Healey’s answers follow.

Does the reform -- actually or effectively -- amount to the direct provision of healthcare by the government?

The government is a direct provider of healthcare only for military personnel and veterans, and the bill would not change that. The government’s role as a provider of health insurance would increase, however, as Medicaid would be extended to more low-income adults and new subsidies would be offered to help make private insurance affordable to those earning less than four times the federal poverty level (currently, about $22,000 for a family of four).

The legislation also would significantly increase the federal government’s role as a healthcare regulator. It would require Americans to obtain health insurance coverage and set minimum standards for what individual policies covered.

Who will be the principal beneficiaries? Specifically, of those without insurance now, who will be receiving it under the reform? Who will still be left out?

The that of the 54 million people likely to be uninsured in 2019, about 32 million would be covered as a result of the legislation. Included are low-income adults who couldn’t afford coverage without the help of taxpayer subsidies, individuals with chronic diseases or preexisting conditions whom insurers would otherwise deny coverage, and healthy people who might otherwise decide not to carry insurance. Left out would be workers who cannot afford coverage even with the subsidies, those who decide to pay the tax penalty in lieu of carrying insurance and illegal immigrants.

It would be a mistake, however, to overlook the benefits the legislation could bring to those who are already insured. Much of the measure is devoted to changing the incentives in the reimbursement system for healthcare to promote efficiency and quality -- in other words, to reorient the system toward keeping people well, rather than profiting from their ailments. The result should be slower growth in healthcare costsover time, which would be a boon to the economy.The bill makes no guarantees on that front, however, and there are no sure ways to limit the demand that drives healthcare spending ever higher.

How does the proposed reform affect Medicare?

There’s a quantitative answer and a qualitative answer. The legislation would expand Medicare prescription drug benefits by phasing out the current gap in coverage (the so-called doughnut hole), eliminate co-pays for government-approved preventive services and offer higher fees to bring more primary care doctors into underserved areas. It also would promote more efficient and higher quality care through several pilot projects. But it also would reduce subsidies for the Medicare Advantage program to bring them closer to the cost of traditional Medicare fee-for-service plans. As a result, Medicare Advantage plans probably would raise co-payments or cut back on the benefits they provide in addition to the standard Medicare services.Qualitatively, the measure would begin the process of reining in the runaway costs that could render the program’s hospital fund insolvent by 2017. It would take a series of steps -- some experimental, some permanent -- to promote higher quality, better coordinated care. It also would spur innovative approaches to delivering and paying for services. And it would put new mechanisms in place to force changes if spending increases faster than expected. It’s worth remembering, though, that Congress’ previous efforts to bring Medicare costs under control haven’t done much beyond reducing the number of doctors and specialists willing to treat Medicare patients.

How does the proposed reform affect Medicaid?

Medicaid would expand significantly, covering “essential” medical services for all individuals younger than 65 years old whose earnings were no more than 33% above the poverty level. The federal government would pick up the tab for the new beneficiaries for the first three years, and the vast majority of the cost after that. And as with Medicare, the bill proposes experiments in promoting more efficient and higher quality care.

Will all doctors participate?

Whether an individual doctor accepts Medicaid, Medicare or the insurance plans subsidized by the legislation would be up to him or her. They would still be free to see patients who pay for care out of pocket.

How will individual access to care be affected?

The most obvious effect would be to provide millions of uninsured, lower-income workers with policies, giving them access to routine care in a doctor’s office instead of relying on emergency rooms for treatment. The legislation also would enable those with preexisting conditions or chronic ailments to obtain insurance more easily by requiring insurers to cover them at the same price as other people in their community and age group. But the influx of newly covered patients could be too much for the healthcare system to handle initially, the Centers for Medicare and Medicaid Services has warned, making it more difficult or expensive to obtain care.

Specifically, what if anything will change when I visit the doctor’s office or require hospital care?

That’s hard to say. The most obvious change may be that your doctor won’t ask you for a co-pay for preventive care, although that perk may not kick in until 2018 for people covered by an employer plan. The bulk of the changes sought by the bill, such as coordinating care better among service providers, promoting wellness and giving doctors better information about which treatments are most effective, are more subtle and less certain in their impact, particularly for patients with private insurance coverage.

How is this reform to be paid for, and by whom?

About half the cost of the subsidies and benefit increases would be covered by reductions to projected Medicare spending (mainly by slowing the growth of selected reimbursement rates and phasing out subsidies for Medicare Advantage). The other half would be covered by tax increases, including new excise taxes on health insurers, medical device makers, drug companies and indoor tanning parlors; a new levy on employers and individuals who fail to obtain insurance; and higher Medicare taxes on the wealthy.

If a portion will be paid through increased income taxes, whose taxes will be increased and by what amount?

Individuals who do not obtain insurance or a hardship waiver would have to pay an income tax penalty (up to 2.5% of household income or $2,085, with the latter amount adjusted for inflation after 2016). Medicare taxes for individuals earning more than $200,000 and couples earning more than $250,000 would increase from 1.45% to 2.35% of wages, and would be applied for the first time to investment income as well. And the threshold for deducting itemized medical expenses would be increased from 7.5% of income to 10%

Will people be obligated to pursue preventive care and penalized if they don’t?

No. Instead, the legislation would increase incentives for preventive care by eliminating co-pays for government-approved techniques and increasing support for wellness efforts in public health programs.

Will people be obligated to pursue a healthy diet and lifestyle and penalized if they don’t?

No. But the bill would let employers offer insurance discounts of up to 30% to workers who participate in wellness and fitness programs. It also would require chain restaurants and vending machines to display nutritional information.

How will the reform handle malpractice abuse while still fairly compensating the injured?

There is no malpractice reform in the bill. Instead, the measure would authorize $50 million for state experiments in alternative ways to resolve malpractice claims. The bill would give preference to proposals that are “likely to enhance patient safety by detecting, analyzing and helping to reduce medical errors and adverse events.”

Will all employers -- large or small -- be required to provide medical insurance?

The legislation requires employers with more than 50 workers to provide insurance or pay a penalty ($2,000 per employee, with the first 30 workers exempted). The mandate would not apply to employers whose full-time workers are all paid well enough not to qualify for premium subsidies. Employers with more than 50 workers who do offer health insurance, but who have low-wage workers choosing instead to buy federally subsidized policies insurance through new insurance exchanges, would have to pay $3,000 for each worker receiving a subsidy. Small businesses that offer health benefits would get a tax credit.

If so, can employers self-insure?

Yes.

What is the minimum care to be provided under the insurance envisioned by the reform proposal? Am I precluded from buying supplemental care if I am able? Will I be taxed for doing so?

Policies for individuals or small groups would have to meet minimum coverage standards set by the secretary of Health and Human Services. They would have to cover “essential” in-patient, outpatient, emergency, maternity, neonatal, pediatric, mental health, rehabilitative, laboratory and preventive services, as well as some prescription drugs, but could not be broader in scope than the typical employer’s plan. The insurance would have to pay for at least 60% of the expected costs of the services it covered, with a tighter limit on out-of-pocket expenses for policyholders with lower incomes.

The coverage requirements would not apply to the market for large groups. Nor would there be any prohibition on or penalty for buying more services than the policy covers, or for buying supplemental policies. However, there would be a tax on high-cost employer-sponsored insurance plans (those priced at more than $10,200 annually for single individuals, with higher thresholds for family coverage, retirees, high-risk jobs and employers with atypical demographics) that insurers would probably pass along to their customers.

How will the reform proposal affect prescription costs and the availability of generics, and who will pay?

Medicare drug benefits would increase through the gradual elimination of the “doughnut hole,” which requires patients to pay the full cost of prescriptions between the initial covered amount (currently $2,700) and catastrophic coverage (currently $6,154). This benefit would be financed through the new excise tax on drug makers, whose cost is likely to be passed on to consumers.

Private insurance plans would have to comply with a minimum level of drug benefits set by the secretary of Health and Human Services. To help lower the cost of new biotechnology-produced drugs, the Food and Drug Administration would be authorized to approve generic versions of some biologic medicines. The president’s proposal also would bar pharmaceutical companies from paying competitors to keep generic versions of their medicines off the market.

Will taxpayer funds be used to pay for abortions?

The only direct funding would be for cases involving rape, incest or risk to the mother’s life. States could bar insurers participating in their exchanges from covering other types of abortions. If they do not, federal subsidies for lower-income individuals could be used to pay part of the cost of policies that covered such procedures. However, insurers would have to allocate the subsidy dollars to non-abortion services, so that customers would technically be paying their own money for the abortion coverage.

Abortion opponents contend that the provision is an accounting gimmick, and that the subsidies shouldn’t be permitted to pay for any part of a policy that includes abortion coverage.

Will medical records be available electronically, and if so, how will medical privacy be accommodated?

The reform proposal says little about electronic records. However, the 2009 economic stimulus bill provided more than $19 billion to encourage doctors and hospitals to digitize their paperwork.

How is billing to be done? Co-pays? Deductibles?

The bill attempts to lower administrative costs by standardizing the way providers interact with insurers. It doesn’t directly address the record-keeping and billing demands that doctors and hospitals make on patients.

Is there any comparable healthcare system elsewhere in the world?

The U.S. system is unique in its heavy reliance on the private sector. The closest analog might be South Korea, which achieved universal health insurance coverage in the late 1980s largely through private insurance companies. But in 2000 the 139 regional insurers were combined into a single national one, with the government regulating the rates it paid to providers.